Will contracting go out with a bang or a whimper?

[LisaContractorUmbrella]

Wouldn't it have to be written in the contract that they waive the right to supervision or direction or control?

It would have to be in the contract yes and it would have to be in fact i.e. the contract would have to be representative of the reality

[LisaContractorUmbrella]

How do you currently demonstrate that a client has no right to control (or, specifically, to dictate the manner in which the services are performed)? It needs to be demonstrated via the contract and the working practices. For example, my contracts will state that MyCo has complete discretion over the manner in which the services are performed; this isn't a problem for me, because I provide specialist services and the client has no capacity to control the manner in which those services are performed (i.e. backed by actuality). In any scenario where the services are highly specialized, it's unlikely that the right to SDC will exist and this should be stated in the contract.

However, two things give me serious cause for concern. First, depending on how a client reacts to this legislation and any associated liability (i.e. badly in many cases), there's a good chance that they won't entertain a contract that reflects reality, i.e. there will be wrongful employment (disguised unemployment? undisguised employment? ). It would be a brave contractor that decided to fight an IR35 case with a contract that explicitly stated a right to SDC. Second, many legitimate contractors do not provide highly specialized services and are subject to some degree of SDC or a right thereof. In these circumstances, the courts will need to decide whether the degree of SDC (or the right thereof) is sufficient to demonstrate employment. My concern is that many contractors will not accept this risk and instead move out of contracting or, much worse, consider aggressive avoidance schemes (as in IR35 Mk I).

In short, I wouldn't have any concerns about the right to SDC if the determination remained with MyCo or if the client were encouraged to produce a contract that reflected reality, but there's a good chance that neither of those two things will happen.

IMHO it can only be confirmed that there will be no right to SDC within the contract - working practices can't determine whether or not there remains in place a 'right' to SDC only that it is exercised. So, I feel that the unintended consequence of all this will be that no client in their right mind will sign a contract which states that they give away all and any right to SDC and everyone will end up inside IR35 by default. It's all very well HMRC et al quoting legal cases (none of which were determined purely on SDC) but this will be the commercial reality of their proposals.

[LondonManc]

What would be a better test is seeing how many of this list we are entitled to:

https://www.citizensadvice.org.uk/wo...ights-at-work/

[pjt]

IMHO it can only be confirmed that there will be no right to SDC within the contract - working practices can't determine whether or not there remains in place a 'right' to SDC only that it is exercised. So, I feel that the unintended consequence of all this will be that no client in their right mind will sign a contract which states that they give away all and any right to SDC and everyone will end up inside IR35 by default. It's all very well HMRC et al quoting legal cases (none of which were determined purely on SDC) but this will be the commercial reality of their proposals.

Hypothetical question Lisa. In your view IF a client was then to give a contract with the right to SDC waived do you think this would be a bullet proof IR35-out gig?

[LisaContractorUmbrella]

Hypothetical question Lisa. In your view IF a client was then to give a contract with the right to SDC waived do you think this would be a bullet proof IR35-out gig?

In theory yes but if the gig was to stack shelves in Tesco and HMRC decided to investigate you'd struggle to make your case because the contract would blatantly not reflect reality. Saying that, the right judge on the right day could find in your favour simply because the contract is a legally binding document.

[gables]

IMHO it can only be confirmed that there will be no right to SDC within the contract - working practices can't determine whether or not there remains in place a 'right' to SDC only that it is exercised. So, I feel that the unintended consequence of all this will be that no client in their right mind will sign a contract which states that they give away all and any right to SDC and everyone will end up inside IR35 by default. It's all very well HMRC et al quoting legal cases (none of which were determined purely on SDC) but this will be the commercial reality of their proposals.

Is this because the scope\context of the SDC is undefined?

[jamesbrown]

IMHO it can only be confirmed that there will be no right to SDC within the contract - working practices can't determine whether or not there remains in place a 'right' to SDC only that it is exercised. So, I feel that the unintended consequence of all this will be that no client in their right mind will sign a contract which states that they give away all and any right to SDC and everyone will end up inside IR35 by default. It's all very well HMRC et al quoting legal cases (none of which were determined purely on SDC) but this will be the commercial reality of their proposals.

I mostly agree, although the current test for control is established in case law as the right to control, and it's whether the right applies in practice, not whether it's stated (or not) in the contract. Working practices can indeed establish whether a right exists, as it may be unspecified in the contract (e.g. Talentcore, where there was no SDC in practice because the managers were never there, but the right existed and was sufficient). In this context, you should read "working practices" as "the reality of the situation". However, I agree with your central point that the client won't want to sign away a right to SDC, especially when it implies a financial liability.

[gables]

In theory yes but if the gig was to stack shelves in Tesco and HMRC decided to investigate you'd struggle to make your case because the contract would blatantly not reflect reality. Saying that, the right judge on the right day could find in your favour simply because the contract is a legally binding document.

Presumably because you're expecting Tesco to be telling you what shelves to stack, but if the contract detailed the shelves to be stacked up front i.e. the deliverables then you were left to get on with it would this not show lack of SDC?

[jamesbrown]

Hypothetical question Lisa. In your view IF a client was then to give a contract with the right to SDC waived do you think this would be a bullet proof IR35-out gig?

No, because it depends on the reality of the situation, but it's highly likely that a client signing away a right to SDC also means it in reality (e.g. they cannot apply SDC in principle if they only understand the outcomes and not how they were arrived at, which is typically the situation in the work I do... and not because I present them with a bird's nest )

[LisaContractorUmbrella]

Is this because the scope\context of the SDC is undefined?

No, it is defined both by HMRC and in case law but it would be a commercial risk for the business (as there are financial penalties for getting it wrong) and most businesses are risk averse especially if they would be taking that risk on behalf of someone else i.e. a contractor. It may be that some will take it on if it looks like they are getting a substantial rate cut but, with the proposed changes to T&S to be taken into consideration, I can only see rates going up and not coming down.